With the liberalization of Malaysia's equity policy, foreign investors can generally hold 100% of the shares in most industries, except for strategic industries related to national interests such as water resources, telecommunications, ports, and energy. Each industry has specific regulations issued by relevant government departments, which include possible restrictions on the company's foreign equity ratio, higher paid-in capital requirements, and the need to obtain regulatory approval before commencing operations (i.e. special approval, business license, permit or registration).

A Malaysian branch is considered a non-resident company for tax purposes and cannot enjoy tax benefits like a start-up company or a resident company. In addition, service fees collected in Malaysia will be subject to a 10% + 3% withholding tax. Therefore, most foreign companies choose to set up a subsidiary rather than a branch.

Representative offices are suitable for foreign companies that wish to collect information on investment opportunities in Malaysia (especially in the manufacturing and service industries), strengthen bilateral trade relations, promote the export of Malaysian goods and services, and conduct research and development (R&D). Representative offices cannot carry out any commercial activities and can only perform designated functions on behalf of the head office/person in charge.